Correlation Between Amazon CDR and Infrastructure Dividend

Can any of the company-specific risk be diversified away by investing in both Amazon CDR and Infrastructure Dividend at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Amazon CDR and Infrastructure Dividend into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Amazon CDR and Infrastructure Dividend Split, you can compare the effects of market volatilities on Amazon CDR and Infrastructure Dividend and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Amazon CDR with a short position of Infrastructure Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon CDR and Infrastructure Dividend.

Diversification Opportunities for Amazon CDR and Infrastructure Dividend

-0.06

Correlation Coefficient

Amazon CDR  Infrastructure Dividend

Good diversification

The 3 months correlation between Amazon and Infrastructure is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Amazon CDR and Infrastructure Dividend Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infrastructure Dividend and Amazon CDR is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Amazon CDR are associated (or correlated) with Infrastructure Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infrastructure Dividend has no effect on the direction of Amazon CDR i.e., Amazon CDR and Infrastructure Dividend go up and down completely randomly.

Pair Corralation between Amazon CDR and Infrastructure Dividend

Assuming the 90 days trading horizon Amazon CDR is expected to generate 3.15 times more return on investment than Infrastructure Dividend. However, Amazon CDR is 3.15 times more volatile than Infrastructure Dividend Split. It trades about 0.05 of its potential returns per unit of risk. Infrastructure Dividend Split is currently generating about 0.0 per unit of risk. If you would invest  2,627  in Amazon CDR on October 6, 2024 and sell it today you would earn a total of  39.00  from holding Amazon CDR or generate 1.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Amazon CDR  vs.  Infrastructure Dividend Split

Amazon CDR

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon CDR are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, Amazon CDR exhibited solid returns over the last few months and may actually be approaching a breakup point.

Infrastructure Dividend

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Infrastructure Dividend Split are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Infrastructure Dividend is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Amazon CDR and Infrastructure Dividend

The main advantage of trading using opposite Amazon CDR and Infrastructure Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon CDR position performs unexpectedly, Infrastructure Dividend can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Infrastructure Dividend will offset losses from the drop in Infrastructure Dividend's long position.

The idea behind Amazon CDR and Infrastructure Dividend Split pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Money Managers module to screen money managers from public funds and ETFs managed around the world.